Crowdfunding is a mechanism of money attraction to various projects, charity, business support, etc. by means of the funds of a big amount of people. It is also a cooperation of people who unite their money, efforts and other resources in order to support the efforts of other people and organizations. Crowdfunding makes it possible to get money without applying to the banks and venture funds. There are such main models of Crowdfunding as charity, kickstarter and crowdvesting. The last one may be subdivided into royalty, shares crowdfunding and national financing.

The term “crowdfunding” is considered to appear in 2006 together with the notion of crowdsourcing, but the ideas itself has a long history. One of the vivid examples of the crowdsourcing is the Statue of Liberty the money for the construction of which were given by people.  The most famous modern American crowdfunding service is Kickstarter. Every month it breaks the records of the raised sums, which may exceed 10 mio dollars.

A big advantage of the crowdfunding consists in the fact that the investors are personally interested in the success of the project. For instance, someone likes the knitted pullovers of the lady who wants to open her own store. The investor gives money for her project and will do his or her best to support it and to make it a success. There are also cases when people invest money in exchange for the share of business. Thus, the investor is interested in the return of investment and will be ready to support and promote the business in a feasible way.

Crowdfunding will be attractive and helpful for those who have some business, social and charity ideas and have no resources for their implementation. Such people should be able to describe brightly their big idea or business plan in order to attract investors. The Internet will help greatly in it. The entrepreneur should find an appropriate community of people who are interested in the same area of work or who are ready to invest in the future start-up.

One of the disadvantages of the investment to the new project or company is the risk that you may lose your money.

In order to hedge your bets you may provide a small amount of money which you are ready to lose. In case the project turns out to be successful, you may invest more in order to have bigger dividends.